Some Keywords

 Capital
 Assets
 Liabilities
 Expenditure
 Income
 Profit
 Goods
Keywords (Continued……)

 Debtors
 Creditors
 Bad debts
 Purchase
 Sales
 Loan
Introduction to Accounting

“Accounting is a process of
identifying, measuring, and
communicating economic
information so that they can make
informed judgments and decisions.”
Users of Financial Information

 Management
 Shareholders
 Investors
 Lenders
 Suppliers
 Customers
 Employees
Users of Financial Information

 Government
 Academicians
 Researchers
 Analysts
Accounting Concepts

 Going concern concept:A business entity

is assumed to carry on its operations
forever.Example: Reliance Industries.
 Cost concept:implies that in accounting, all
transactions are generally recorded at cost, &
not at market value.For example: if a piece of
land is acquired for Rs. 1 lakh,it would
continue to be shown in balance sheet at Rs. 1
lakh,even when the market value of the land
rises to Rs. 2 lakh.
 Money measurement concept:in financial
accountancy a record is made only of
information that can be expressed in
monetary terms.
 Accounting period concept:Income or loss of
the business is measured periodically.This is
measured for a specific interval of time called
the accounting period. Example:1st April to 31st
march.Accounting period should be specified
& under the companies act, a company is
normally not permitted to have accounting
period exceeding fifteen months.
 Matching concept:In order to determine
the profits or losses accrued in an
accounting period, the expenses must
relate to the goods or services sold
during the period.
 Conservatism concept:The idea behind
this principle is that recognition of
revenue requires better evidence than
expenses.
 Business entity Concept:The legal entity
of a business, is distinct from the entity
of it’s owners .
 Consistency Concept:requires that once
an entity has decided on one method, it
will treat all subsequent events of the
same character in same fashion unless it
has a sound reason to change.
 Duality or Accounting Equivalence
Concept:-

Owner’s equity+outside liability=Assets

Note: Above equation is known as
Fundamental Accounting Equation.